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Jacqueline W's avatar

Great discussion and pulling all the threads together. There's another typo in the transcription of Marc Andreessen (great interview, I finally got around to listening to the whole thing) where he's referring to 'unrealised capital gains' (not 'capital games'). As someone living in Europe (Ireland) I am really starting to worry about the future and how we are going to get out of this hole our elites will not stop digging.

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Lorenzo Warby's avatar

Fixed! Ta. And indeed.

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Kurt's avatar

American living for several years in Wuhan, amateur but ardent student of Chinese history...and I think these are astute observations, explained very well, and the entire piece is nicely structured making it quite fun to read.

Nice job, thanks much.

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Lorenzo Warby's avatar

Thank you.

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Frederick Roth's avatar

The interesting difference between ancient China and the West today is that there are plenty of easily observable counterparties available. If the Trumpian razor looks like having good effects a few years down the road European and Anglosphere countries will be tempted to follow. Although no other country has as strong an executive so the reform process will be much slower.

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ssri's avatar

We in the US might hope our allies and "partners" get their act together sooner rather than later. I am still surprised we are seeing the lag or delays in Europe still in evidence, given the horror of govt abuses around the current "free speech" stances, the gargantuan waste on wind and solar (and killing existing nuclear capability), and the Rotherham situation and jihadi events being so prolific, etc.

But note that the US president is still only as strong as the other two branches let him be, presuming they are of the same party, etc., and even that is not a solid guarantee. "Live by the EO, die by the EO". While the executive branch was intended to enable "energy" and prompt responses when called for, it was still written during an age of 3 to 6 mph transport and communication. The current DOGE results are basically capturing the low hanging fruit, mostly in the discretionary part of the budget, and more subtle fraud is probably harder to discover. Plus we still need Congressional action to reform the big debt items of entitlements, civil service personnel rules, etc.

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Frederick Roth's avatar

I don't think outright fraud is the main threat politically (or just plain waste). The major dynamic is that govt institutions and quasi-govt ones like academia & state-owned media have become "sheltered workshops" and "activist rookeries". Where people spend sinecured (and tenured) careers basically advancing their preferred ideology rather than doing their substantive job. Cue the humanities academic "researching" colonial theory or the "journalist" engaging in eg anti-Western propaganda instead of straight reporting.

Cleansing these would be like Hercules hosing out the stables-whose-name-I-don't-remember from Greek mythology.

(Augean! Yes, I cheated by looking it up).

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Rather Curmudgeonly's avatar

"Section 1, Article II of the US Constitution"

The American Progressive movement has a deep and abiding disregard for the Constitution. Currently they aren't as overt as Wilson was, but the characteristic defines them nonetheless. Thus you see supposedly serious arguments that the bureaucracy isn't meant to be under the authority of the President, that clause of the Constitution be damned.

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ssri's avatar

And they are now much more covert and slimey in what they have done to restrict and curtail the unitary executive role. So now we do need a strong executive to plug the "flow of resources" currently enacted or siphoned. But given the current reach of the federal government (here and often abroad), I also have reservations about letting that executive energy lose upon our modern world. Recall what Washington said about fire as a useful servant and a terrible master.

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Francis Turner's avatar

“Almost everything is a weak reed, compared to incentive structures.” is a restatement of one of the key economic laws that “incentives matter”. As Parkinson, Pournelle and many others have noted the incentives to bureaucrats are not to provide good efficient service to the citizens they are supposed to serve or the tax-payers that fund them (the sets of tax-payers and citizens overlap but are not at all identical)

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Laura Creighton's avatar

1. typo 'weak reed' not 'week reed' (x2).

One thing we can do is to ban the government sending money to NGO/charities/non-profits.

The government may want to buy goods and services from NGOs, but the goods-and-services end of the NGO needs to be set up as a regular for-profit company, which charges

the government money and pays taxes just like any other company the government outsources work to.

Another is to have much stiffer penalties for the abuse of political power, and for the soliciting of such abuse. Right now we pretty much operate as if when a corporation bribes an official, we sack the official or maybe give the official a small jail sentence all the while saying 'oh how terrible'. But the corporation? Ah, "boys will be boys" is still the attitude, even if they now need more gender-inclusive language. This leaves the incentive intact. What you want to do is imprison the bribe offerers, and give them fairly stiff sentences. And if that fails to have the desirable effect, you need to shut down the corporation altogether. Some NGOs need to be shut down as well, because they are beyond reform.

We may not be able to make them virtuous, but we can surely make them fear the appearance of vice.

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ssri's avatar

Yes, from my days as a defense contractor employee, the govt does need contractors for many ordinary and quite a few specialized functions. And using contractors allows flexibility in net equivalent staffing levels, etc.

But there should be frequent and open competition for those contracts, with clear (and as specific as possible) requests for proposals, objective review of received proposals, and many reviews and audits during contract performance. These audits ought to follow the project mgmt criteria of measuring earned value metrics. These metrics usually include schedule milestones vs. money spent, but can and should also include steps in the delivery process vs. schedule and money. For example, definition of requirements, number of requirements met by the optimal design (need to get to 100%), test results vs. requirements, etc.

Proper incentives to obtain the next contract help, too. But when the bureaucrat and the contractor are in cahoots, then separate independent auditors are of course essential to surface fraud, nepotism, abuses, waste, etc.

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Lorenzo Warby's avatar

Fixed the typos, ta, and quite so.

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Michael A Alexander's avatar

Cycles like those in dynastic China (secular cycles) are also present in Western countries. Here is a paper I wrote in the English cycles.

https://escholarship.org/uc/item/230872k1

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Lorenzo Warby's avatar

Am enjoying your paper. I am not fond of using the concept of legitimacy as an analytical tool. For the reasons discussed here: https://journals.sagepub.com/doi/full/10.1111/1467-9248.12202

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Michael A Alexander's avatar

I wanted to give an interpretation for S the model so that people did not think I was proposing the existence of surplus state wealth. After all S literally is accumulated surplus output, suggesting an accumulation of some physical thing. There is no evidence that S refers to some physical quantity.

So I gave it an interpretation as legitimacy to reflect its stabilizing function when it is positive.

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Lorenzo Warby's avatar

Fair enough. As Xavier Marquez argues, the point is not that there is nothing there being referred to, it is there are alternative ways of formulating it that do not rely on uncheckable claims about what’s in people’s heads.

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Michael A Alexander's avatar

Absolutely, its a bit of a handwave, but the model seems to have some use, particularly in clarified how I think about these immiseration cycles.

Like I find your separation between inflation and price rises due the immiseration as a distinction without a difference in terms of the actual observation, the direction of the trend in a price series.

When population is rising and agricultural output is maxed out, the price of foodstuffs will go up. Townspeople will need more money to buy the same food they used to. That means they will try to charge more for their manufactured goods .so prices for nonagricultural output go up too. IF they cannot sell for higher prices, they cannot buy enough food to continue on in their business and the supply of such goods declines. Either way the price of manufactured goods will also rise because of food shortage.

Since more money is needed to for the same transactions, rising prices caused by immiseration would seem to create a demand for more money to pay the higher prices. This could be met through increased credit-money like bills of exchange, or through faster circulation of existing coins and bills.

Increased demand for more money ought to mean increased demand for coins. But this would boost the price of silver used for money, but the value of money relative to other stuff has gone down. So I couldn't figure how immiseration price rises can translate to increases in the supply of physical (silver) money, which is necessary for quantity-theory-of-money ideas to work, which they certainly seem to have later on.

When I was thinking about this like 9 years ago, I tried divided a region into local market subregions with their own supply demand relationships, with merchants moving from one to another place taking advantage of price differences, to try to figure out how a local famine here would stimulate silver production over there, but couldn't sort it all out in my head, so I put the whole thing on a shelf and went on to something else (it is a hobby after all).

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Lorenzo Warby's avatar

Once there is the massive surge in Central European silver production, followed by the flood of American silver, and the continuing expansion in various forms of credit, the quantity theory of money (for the use of money in exchange) seems to work fine. If money (or monetised credit) is one side of (almost) all transactions, the ratio of its use-in-exchange to output will matter.

For the medieval economy, where there were a lot of in-kind transactions in highly localised economies, perhaps not so much. Expressed demand could increase “on its own”, so to speak. Although, there were a lot of non-monetary uses of silver which folk could switch between, given that people literally took their silver to the mint to be made into coins.

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Lorenzo Warby's avatar

So, finished reading your paper, which I enjoyed. It is now clear to me, in a way that was not true when I was struggling with Fischer’s analysis , that macro analysis of societies with lots of in-kind transactions—entirely possible in societies with lots of stable local connections—is quite different from societies where money (or monetised credit) is one half of almost all transactions.

In terms of economic history, there are two break-points. One around 1500 in Europe, where in-kind transactions dwindled, being replaced by monetised (either money, or monetised credit) exchanges.

The other, around 1830 also beginning in Europe, when land/population (or land/labour) ratios become increasingly secondary and labour/capital ratios become increasingly dominant.

So, your statement: “Ultimately, price, economic inequality, elite numbers, and state strength are all consequences of population dynamics” is true before 1500; the price point is decreasingly true after 1500; and the rest decreasingly true after 1830.

Similarly, “Rising population should still shift bargaining power towards employers regardless of price trends” is not true if capital is increasing faster than labour, because then labour is becoming relatively more scarce, even if population is rising.

The population of the UK rose massively from 1823 (when the UK went back to gold convertibility for its currency) to 1914 (when it suspended the same), there was barely any net shift in the price level and wages went up significantly.

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Michael A Alexander's avatar

Based on the data I showed I would argue that the agrarian secular cycle dynamics should hold until the industrial revolution. The IR acted as a "force-multiplier" on capitalism and once it took hold (I'll go with you 1830 date) the industrial dynamics operate.

The industrial cycle dynamics are discussed in this paper.

https://escholarship.org/uc/item/9x36913k

In my agrarian cycle paper (the one you read) I did not come up with an ending date for the mercantile cycle because that cycle may have begun with agrarian elites in the driving seat, but it did not end that way. It may have begun where there was still quite a bit of population-driven dynamics, but it did not end that way.

I shift to America for the industrial analysis because that is the country I know best and for which I have her most data.

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Michael A Alexander's avatar

The correlation between population and price held through the 17th century

https://mikebert.neocities.org/price-pop-fig1.gif

But then broke down shortly after 1700.

https://mikebert.neocities.org/price-pop-fig2.gif

I also note that per-capita GDP, after being flat for 250 years, began to rise in the final third of the 17th century:

https://mikealexander.substack.com/p/how-cultural-evolution-works#:~:text=Figure%201.%20Real%20GDP%20per%20capita%20in%20England%201420%2D1870

I attribute this to the rise of capitalism to a level high enough where it shows up in aggregate statistics. I define capitalism as an economic system in which the overarching goal of economic activity is the growth of capital, which when combined with labor produces more output per person.

Once this happens, immiseration can no longer happen and the correlation between rising population and price ends. There is then a correlation with government debt as I illustrate here:

https://mikealexander.substack.com/p/summary-of-concepts-involved-in-addressing#:~:text=Table%201.%20Inflation%20and%20debt%20growth%20during%20war%20and%20peace

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Lorenzo Warby's avatar

I have added an Addenda to my post on Fischer, linking to this discussion.

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Lorenzo Warby's avatar

I have started reading your paper, ta. I did a post on Fischer’s book, which I found to be somewhat confused.

https://www.lorenzofromoz.net/p/immiseration-cycles-and-monetary

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Laura Creighton's avatar

Pfizer corporation has a history scholarship section?

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Michael A Alexander's avatar

No. I was an industrial scientist at, initially Upjohn, but after several mergers eventually Pfizer from 1988-2021. I worked in bioprocess development, but in both fermentation and isolation/purification to product the active drug substance. This would then go to formulation where it was made into the actual drug products (the pills, ointments, injections etc) that is sold in drug stores or used in hospitals/clinics.

Writing on this social science stuff is a hobby I began around 25 years ago and is now by retirement. When I wrote that the form has a spot for institution, Well Pfizer was my employer so I put that in. Didn't do that for my later papers, and now of course I have no institution. So Pfizer has nothing to do with it.

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Laura Creighton's avatar

Thank you for the paper. That was a very interesting read. Monastical orders as a solution to elite-overproduction, hmmm.

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ssri's avatar

Careful, though, or we will end up with an excess of Gregor Mendels!! :-)

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Lorenzo Warby's avatar

I am clearly missing something, what is the connection?

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Laura Creighton's avatar

Application of Mathematical Models to English Secular Cycles

Michael Alexander

Pfizer Corporation

I must say that if Pfizer ever wants to bribe me for some reason they would be more likely to succeed by offering me interesting history papers rather than cash. :)

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Lorenzo Warby's avatar

I am so used to ignoring affiliations, I didn’t notice. (I like to look at the arguments directly.)

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ssri's avatar

Given the value of my time, I would prefer that publications explicitly provided the following up front, and in this order:

1) title as approximation of the topic/ content -- do I really have an interest in this subject as worthy of my time to learn more?

2) date, so I can integrate old or new information into my past recollections and mental file cabinets, plus if newer information should be granted privilege over older sources

3) author and his/her credentials/ position to help establish some sort of credibility or "legitimacy" :-) . Affiliations can be useful in that regard, but not totally so, as people do move from one to another organization - e.g., Niall Ferguson, although sometimes academics hold multiple postions at once? A listing of past books published can be helpful at times, while a list of journals the author has written for seems to be less compelling. Plus favorable past experiences with a given author incentivize reading their new materials, while the reverse applies for poor prior results.

Perhaps a new or unknown source should be given the benefit of an initial exploration, since certainly a work should really stand on the quality of what is provided. But as we are learning, there are so many elites and "elites" being generated today that many must be ignored no matter their value or lack thereof.

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Ron's avatar
Feb 28Edited

Great comparison. I hope DOGE will make progress.

I created a Bluesky account after the elections in the US so I could gain insight into the woke bubble. It was an awful pit three months ago, and I abandoned it. Today, I checked it for the second time, and while it seemed impossible for it to get any worse, it is now infinitely and sincerely more deplorable. TDS, MDS, and all the -isms and -phobias are chanted like the enemies of the woke religion they belong to, as if these were their rituals for exorcising demons. If these guys win the next election, Biden's 4 years will look like good times.

Lorenzo, you may already have an account, but if not, you really need to set one up and check it out.

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ssri's avatar

"Modern left-progressive politics has one aim, and one aim only: to insert the professional-managerial class into resources flows wherever possible." What a sly way of phrasing this!! :-)

So much more refined that "dipping their hands (or other body parts?) into a torrant of grift and graft!!"

"If we could find some systematic test of character—the role duels used to play—that would be great."

Maybe we can and should bring paint ball dueling back into vogue? Pepper spray? Rubber bullets? Loser submits to a permanent tatoo on his/her forehead that says "LOSER!!"

I have often heard the expression "tar and feather them" and "run them out of town on a rail", but I have never actually come across a credible historical mention that that form of punishment was ever actually performed - at least after say 1800??

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Stephen Webb's avatar

Such a great piece and some great reading suggestions on China in particular. Take your point about the analogies to the

situation in the UK. I actually think reasserting Ministerial control on the UK system is technically far easier than in the US. This paper i cowrote for Policy Exchange sets out a plan. The question is the will - in a sense do our politicians actually have the will to power?

https://policyexchange.org.uk/publication/getting-a-grip-on-the-system-2/

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David Conroy's avatar

Wow, I thought my views on the the U.S. being overtaken by Imperial China and the culture of the examination system were sufficiently weird that I never expected to see anyone else express them.

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ssri's avatar

Lorenzo is very good at connecting the dots (historical and modern) that many others miss.

We also need to remember that a reasonably open and free marketplace offers a rigorous profit and loss exam system all by itself in the private sector. This is further aided by wiser money lending and decent court enforcement and review of contracts.

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Bird's Brain's avatar

Fascinating and an education in something I'd never thought to consider as always!

A small typo ...

"turned out to be a week reed ... (Almost everything is a week reed...)" Should be "weak" reed?

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Lorenzo Warby's avatar

Fixed, ta, and glad you liked the post.

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jeremy1113's avatar

One question I have is: why the novelty-sized erection among western elites for mass immigration? (You may have answered this in another essay.)

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Lorenzo Warby's avatar

I have an essay coming out on Helen Dale’s that considers that. This essay by me touches on it.

https://www.lorenzofromoz.net/p/the-migration-scam

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jeremy1113's avatar

LOL yes I thought so. Thanks.

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stu's avatar

The claim that DOGE is performing audits sounds very 1984 to me. In the case of USAID, they at most collected a few anecdotes and some of those weren't even USAID. I have yet to hear of anything close to an actual audit.

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